Copyright 2002 Warren Publishing, Inc.

Communications Daily…06/21/2002

From LexisNexis

A former federal regulator said during an Internet conference Thursday that wireless LAN technology, or Wi-Fi, could solve broadband last-mile problems and lead to communications "nirvana," but only if the federal government didn't block its growth.

Former FCC Chmn. Reed Hundt told Internet Society's INet 2002 that the use of unlicensed spectrum to wirelessly extend broadband connections could lead to ubiquitous Internet interconnection unless "the government steps in and by accident, with indifference or intent, acts to kill Wi-Fi." Hundt acknowledged the current FCC chairman had said he supported Wi- Fi's deployment, but noted that policymakers couldn't always back up their positions and "Michael's (Powell) got to get the votes."

Meanwhile, Earthlink 's founder discussed his new project, Boingo Wireless, that seeks to bring together various operators of Wi-Fi "hot spots" to allow users continuous coverage with technology that has a propagation range of about 300 feet. Wi-Fi, he said, is "fundamentally underhyped as the next chapter of the Internet."

Both Hundt and Boingo CEO Sky Dayton drew distinctions between Wi-Fi, which they said is here now and growing at a phenomenal rate, and 3G wireless Internet service promised by wireless phone providers. They said those carriers had spent billions on spectrum and specialized equipment from relatively few vendors, while the device size of a paperback book that created wireless LAN hot spot cost less than $200, and a wireless LAN card for laptop or PDA (personal digital assistant) cost less than $100. Transmission cost is several times cheaper via Wi-Fi and the gap is growing daily, Dayton said: "It has a price per bit that no other technology could touch."

Hundt, now a consultant with McKinsey & Co., predicted that by the end of 2005 cellular would be carrying 17 percent less data traffic than it otherwise would due to Wi-Fi and the ubiquity of Wi-Fi would increase the total wireless data pie 19 percent. "The total pie will be bigger and the slice for cellular will be smaller," he said, and the only thing that could thwart that prediction would be government regulation stifling Wi-Fi. Cellular carriers presumably would be resistant to Wi-Fi, he said, given their financial commitment to 3G on purchased spectrum, but he cited other concerned parties as well.

"There is not a more aggressive group in America" in lobbying than ham radio operators, Hundt said, and they and manufacturers of cordless phones, microwave ovens and others are complaining to the FCC about Wi-Fi's use of the same unregulated spectrum. One pitch made by Wi-Fi opponents, Hundt said, is that the FCC has an obligation to require minimum quality-of-service (QoS) standards, which he said would kill entrepreneurship because no start-up could hope to match an incumbent on that standard. "Once you get in the stalking horse of quality of service, you allow for the stifling of innovation."

Dayton said that regardless of regulators, Wi-Fi "has gotten an incredible escape velocity. It's almost an industry at this point. It will be in a year." He left Earthlink two years ago looking for the next big thing, and found it in Wi-Fi, he said.

With numerous manufacturers and a unified transmission standard, he said equipment costs would continue to plummet and it wouldn't be long before hotels, restaurants, retail establishments and public places were covered by Wi-Fi. He said policy-makers needed to recognize fact that "Wi-Fi has the potential to be the last 300 feet of the Internet." Dayton conducted a live test during his presentation and detected four separate Wi-Fi networks "hot" in Arlington County, Va., Crystal Gateway Marriott's main conference room, and connected to one seamlessly. At least one journalist in the room was using one of the Wi-Fi connections to file in real time to his newspaper's Web site.

Hundt described what he saw as broadband "nirvana." In that scenario, the federal government would subsidize the deployment of fiber across the country and it would be interconnected with Wi-Fi. On those two platforms carriers would be free to compete, a model similar to that of S. Korea, a nation with the highest broadband penetration rate. That country hasn't incorporated wireless into its formula, but Hundt said that "in Korea everybody lives in the same apartment building in Seoul."

As for concerns about security, Dayton said "that's quickly becoming a nonissue" as companies such as his incorporate encryption and virtual private networks (VPNs). Dayton did share Hundt's concerns about entrenched interests opposing Wi-Fi: "This obviously is running up against companies that have spent a lot." But he said that with Wi-Fi's inherent distance disadvantage, it could be teamed with cellular networks for true Internet ubiquity: "It is a platform that empires will be built on."